Discussions on Cyprus' participation in the Great Sea Interconnector (formerly EuroAsia Interconnector), will continue in the Cabinet to take place next week, Minister of Energy George Papanastasiou said on Friday. He was speaking after the Cabinet's session during which he outlined the project's benefits and risks.

In statements to the press, Papanastasiou also said that Cyprus was in arbitration in a London court with the construction company responsible for the LNG terminal station in Vasiliko, while he didn’t rule out the possibility of terminating the contract and seeking compensation due to delays and project delivery failure.

Meeting with Greece and Israel possibly next March

Responding to questions, Papanastasiou said that talks regarding the electricity interconnection with Greece and Israel, funded by the EU with 657 million euros, have been ongoing. He expressed hope for a “the right decision” from Cyprus in the coming week.

When asked about a potential meeting between Cyprus, Greece, and Israel, Papanastasiou confirmed a discussion last week with Israel's new Energy Minister, with whom they discussed the electrical interconnection of Israel with Cyprus, the connection of Cyprus with the natural gas network of Israel and the acceleration of the tripartite relationship of Cyprus, Greece, Israel.

He added that he was invited to visit Israel and said that a decision on when and where the meeting would take place would be made in due course, adding that it may take place in Cyprus next March, covering broader energy issues. He also said that his Greek counterpart would be invited too.

Papanastasiou emphasised Israel's interest in Cyprus as an alternative solution for its energy needs, considering its substantial quantities of natural gas available in the Eastern Mediterranean. He highlighted the potential for Cyprus to serve as an outlet for Israel's natural gas and electricity to the markets.

Responding to whether Cyprus should have answered whether or not it will participate in the financial part for the Great Sea Interconnector, by January 31, Papanastasiou explained that further discussion was needed and the decision would be concluded in the following week. 

"As the Ministry of Energy, we have presented the advantages and risks of this electricity interconnection. Through the ongoing discussion that started today and will continue into the next week, a decision will be reached," Papanastasiou added.

Cyprus considers alternatives for Vasiliko LNG terminal

The Energy Minister provided also updates on the Vasiliko LNG terminal, saying that it was currently 45-50% completed, with significant work remaining to be done. He pointed out the indispensability of the terminal station for the operation of the floating unit.

The Minister disclosed that various alternatives were being considered, taking into account the reactions of the construction company. As he noted, "a painful solution that I cannot hide would be the complete termination of relations with this specific construction company."

Papanastasiou said that the contractor had requested multiple extensions. Initially scheduled for completion in September 2022, the project's deadlines were extended to July 2023, then October 2023, and subsequently to July 2024. Papanastasiou criticised the continuous extensions, saying that when a contractor constantly extends the delivery date of critical infrastructure for a country and a European project, this would indicate serious problems.

He also noted that the suspension of terminal construction works, constitutes a breach of the contract. He added that in the recent London arbitration, a list of works amounting to over €200 million, which Cyprus believes lacks documentation, was presented by the contractor.

"Our side strongly believes that it has adhered strictly to the contract," said Papanastasiou, adding that potential claims for delays and failure to complete the project on time might be part of the forthcoming discussion, either in London or elsewhere.

According to the Minister contract clauses allow Cyprus to claim compensation for delays and the contractor's failure to complete the project, but he did not refer to specific numbers.